Patent and Trademark Office Fee Study
Summary of Customer Input Sessions
Dichotomy of PTO Front-End Costs and Back-End Revenues
One of the issues identified by the
General Accounting Office was the dichotomy of front-end costs
and back-end revenues at the PTO. The participants at the customer
sessions provided a wide variety of reactions to this issue, ranging
from minimal concern to creative proposals that would address
The majority of comments provided by
session participants support the existing dichotomy. It was stated
that the dichotomy issue reflects commercial reality; there are
up-front costs associated with any investment or business. Additionally,
the low front-end fee amounts provide maximum access to the patent
system, especially to small entities and individual inventors.
Low front-end fees allow both small and large entities to file
marginal in-house inventions that may not have been filed with
higher front-end fees.
Many of the same participants stated
that an increase in front-end fees would not support the PTO's
constitutional mandate to "promote the progress of science
and useful arts" and would directly contradict the PTO's
goal of allowing access to the patent system. Increasing front-end
fees would minimize the economic benefit received from the disclosure
of information by discouraging filings. Instead of increasing
front-end fees, it was proposed that the PTO charge fees when
the value of the patent is received, which is upon issue and throughout
the patent's life.
There were some session participants
who opposed the current fee structure, especially maintenance
fees. These customers feel that the patent fee schedule places
a burden on potential applicants, especially when maintenance
fees are taken into account. It was suggested that the PTO eliminate
maintenance fees and recoup the lost income through diverted fee
income, appropriations from the general treasury fund, or from
royalties on successful patents.
A number of session participants do
not view patent fees as impediments to their participation in
the patent system. When considering the total cost of processing
a patent application, including attorney costs, many concluded
that PTO fees are reasonable. However, not all participants shared
that view, especially those who funded their own research and
patenting efforts outside of a corporate setting.
Several proposals were raised which would recover a higher percentage of costs prior to issuance of a patent. These proposals included:
Also provided by session participants were methods of modifying the current maintenance fee system to generate additional revenue, thus minimizing front-end fees:
Successful Applicants Pay a Larger Share of Costs than Unsuccessful Applicants
Most customers seemed aware that the
current fee structure resulted in subsidization of unsuccessful
applicants, and did not have serious objections to this subsidization.
Suggestions by many customers would in fact result in a fee structure
that further increases the subsidization of unsuccessful applications.
These suggestions included adding a 4th maintenance
fee, charging patent owners based on the income derived from their
patents (such as a tax on royalties), and charging maintenance
fees based on some estimate of the economic value of a patent.
Support for the back-ended fee structure had several bases, which included:
For those customers who opposed the current subsidization of applications, suggestions tended to center around:
Under the "pay as you go"
approach, the applicant would be charged fees that recovered a
greater share of costs at each stage of the process. This proposal
was often linked to the concept of a separate search and/or examination,
similar to the EPO process. Under the combined filing and issue
fee proposal, average fees paid by applicants through examination
would be lower because applicants whose applications did not issue
would pay higher fee levels than under the current system.
Reasons for decreasing the current level of subsidization for unsuccessful applications centered around:
Concerns With GAO Definition of Unsuccessful Applications, and Impact on Degree of Subsidization
Many customers had a different definition
of a successful application than the one found in the GAO report.
The GAO report defined a successful application as one that was
allowed and issued, without taking into account continuation filings.
For customers, a successful application was one that was successfully
commercialized. Customers distinguished between abandonment of
an application versus abandonment of the invention. If prosecution
was continued in a subsequent application, the invention might
still be patented and commercialized, and become "successful".
Customers pointed out that when a continuation
is filed, while the PTO might not receive an issue fee on the
abandoned application, the PTO did receive an additional filing
fee, and often incurred much less expense in the second round
of examination, especially if the same examiner who had prosecuted
the parent application received the continuation application.
One customer expressed the opinion that when continuation applications
were taken into account, approximately 90 percent of inventions
were ultimately allowed. From this standpoint, the subsidization
of unsuccessful applicants might be considerably lower.
Fees Do Not Vary by Invention Type, Even Though the Time and Complexity Involved in Examining Applications Can Vary Significantly
Many customers are in agreement and
believe the PTO can justify the need for charging a different
filing fee based on the complexity of the application. An overwhelming
majority believes the task would be burdensome to the current
process and create a dissimilar fee schedule across industry lines.
Considering the comments received during our customer sessions,
complexity factors are full of disparities. Participants believe
charging by complexity may lead to a patent system that would
not only discourage patent filing, but also add ambiguity to the
Charging applicants based on the amount of examiner time used, solicited the largest endorsement. Billable hours or something similar to the way lawyer's bill clients for the time they spend performing searches was most frequently suggested. This method provides an equitable pricing strategy across the board. A point was made that, because some examiners examine faster than others, applicants will still be subjected to paying higher fees. Participants mentioned other possible alternatives in determining complexity factors, which include:
Complexity is in the eye of the beholder.
Therefore, determination of the factors involved would be subjective
in nature. Any changes to the current fee schedule would have
to address the subjectivity issue, and provide an equable alternate
to all applicants.
Examination Time Can Increase Significantly When the Application is Either Inaccurate or Incomplete
Throughout the customer sessions, the majority of participants stated that applicants would support an increase to the existing surcharge fee to recover the actual cost of processing and storing incomplete applications. The willingness to pay this higher fee was based on the following points:
However, some session participants disagreed with the alternative which would recover costs through an increased surcharge fee. The following reasons for disagreement were discussed:
PTO's Current Fee Schedule, Ease of Use
Customers provided a broad range of responses regarding the ease of using the current fee schedule, from being very difficult to use to very easy to understand. From the responses provided, the PTO is doing many things that the customers desire and appreciate, such as:
Overall, it appears the fee schedule
system is satisfactory and meets the needs of most PTO customers.
However, the fee schedule can still be improved by incorporating
some suggestions that were provided by the focus session participants.
It would be beneficial for both the PTO and customers to simplify
and clarify the fee schedule as much as possible, especially in
the maintenance fee and petition fee areas This
would reduce delays in processing, thereby expediting the handling
of the applications. Many participants were hopeful that the review
and study of the PTO fee structure will bring about enhancements
to future fee schedules. It should be noted that some suggestions,
such as simplifying the fee structure, were not always in agreement
with other suggestions, such as charging for complexity differences
During the customer sessions customers were generally in favor of moving to a system of filing patent applications electronically. They pointed out many advantages to such a system, including the following:
Few customers were opposed to an electronic filing system; however, there were several common concerns with such a system, or the transition to it, including the following:
New Products or Services
There are three primary outcomes targeted
by customer requests for new products and services. The outcomes
can be grouped into the following categories: new or greater access
to information, new or greater assistance and training, and new
or improved processes and operations.
In terms of new or greater access to information, most of the requests are for on-line/electronic products and services. Customers are primarily interested in using the Internet or some other on-line capability to conduct searches and to download PTO information. A list of requests and concerns about products and services includes:
In terms of assistance and training, customers are looking for government and industry help in utilizing the patent and trademark system to successfully obtain a patent or trademark and to achieve commercial success. A list of requests includes:
As for processes and operations, customers are looking for new or improved PTO processes and operations that will satisfy their needs for simplicity, convenience, quality and time savings. A list of requests includes:
Other Issues Discussed
Patent Surcharge Fund
The Patent Surcharge Fund was on many
session participants' minds, and struck a strong emotional chord.
Most sessions opened with a discussion of this issue. Words such
as "outrage", "unconscionable", and "disturbing"
were used by some participants to express their views on the increasing
levels of unappropriated patent fees.
Regardless of whether participants were individual inventors or represented large corporate customers, they found common ground in their opposition to what they viewed as a diversion of their fees by the government. Comments from customers included the following:
At the most basic levels, participants
indicated that the lack of full appropriations gave the appearance
that Congress does not care about the patent system, and the disclosure
of new technology.
The term "cash cow" was raised by more
than one participant, and the belief was expressed in several
sessions that the PTO was viewed by the government as a source
of additional revenue for other government operations. One participant
was very incensed and seriously suggested that the PTO should
fight back on the Surcharge Fund reductions and sue in court.
Another participant noted that the diversion
of PTO fee income weakened the US's attempts to create a more
favorable international climate for US applicants seeking patent
protection abroad. At the same time that the US is encouraging
other patent offices to lower their fees (particularly in Europe),
it is diverting fees domestically. From the participant's standpoint,
when the US is not practicing what it is asking others to do,
it only weakens attempts to help US inventors who seek patent
Concerns were also raised regarding the impact of appropriation reductions on the PTO's ability to deliver the level of quality and service provided in the past. Comments received included the following:
Many participants also felt that it was pointless to pursue changes to the fee structure as long as funds were being diverted from the PTO. The sentiments were summed up by a few of the comments received:
Participants put forward some clear
suggestions for uses of the diverted fee revenues. Most participants
wanted the fees to be used to improve what was viewed as deteriorating
service and examination, including hiring additional patent examiners,
and paying higher salaries in order to retain experienced examiners.
Another frequent suggestion was that the patent fees should be
Although the Omnibus Budget Reconciliation Act
(OBRA) and the Patent Surcharge Fund are currently slated
to expire after FY 1998, some participants were less than sanguine
about whether the expiration of OBRA would stop the diversion
of patent fees. One
participant asked, "If the Congress allows the PTO to get
out from under the surcharge fund, how will that keep Congress
from taking the money and depositing it in another government
Many customers indicated they would
be willing to pay greater fee amounts to expedite their applications
through the examination process. Expedited processing would be
an extremely valuable service for some industries. The extra revenue
generated from this service could be used to hire additional examiners,
so that regular applications would not be adversely impacted in
terms of their application's cycle time. It was also suggested
that the extra revenue generated could be used to further subsidize
small entity applicants.
Customers were concerned that the fee
charged for an expedited application would create a two tiered
system that would be unfair to smaller entities not able to pay
the larger fee amounts. In addition, the concept is thought to
be too close to buying examiner time.
It should be noted that not all participants
were interested in having their application processing expedited.
Some would prefer to be able to have the option to delay examination.
During each of the sessions with PTO customers, annual maintenance fees were discussed with mixed results. Comments included:
In addition to annual maintenance fees, other general comments regarding PTO maintenance fees included:
In all of the customer sessions, there
was general consensus that the PTO needs to improve the quality
of its searches. The meeting participants felt more comfortable
with searches completed by private search firms and the European
Patent Office, even considering the higher costs associated with
these organizations. Several participants suggested that PTO transition
itself to a cognitive search system instead of word search system.
Additionally, it was suggested that all applicants need to complete
more comprehensive research prior to submitting an application,
therefore decreasing their reliance on PTO searches.
In addition to suggestions for higher quality searches, the possibility of the PTO splitting its search and examination functions and establishing a separate examination fee was discussed. There were mixed reactions from the participants:
Small entity subsidy
The subject of the current small entity
subsidy was discussed at each customer session. There was agreement
among most participants that the subsidy promotes access to the
patent system, and should remain in place. However, there was
also general agreement that the PTO needs to redefine the amount
of the subsidy, and qualifications for the subsidy.
The following three ideas emerged from most of the customer sessions:
Other issues related to the small entity subsidy were also discussed:
Many customers indicated that patent
fees for countries other than the US are much greater than US
filing fees. It was suggested that the PTO charge different fee
amounts based on the applicant's nationality. Customers also suggested
it was unfair that US large entity applicants are subsidizing
non-US small entity applicants with the reduced fees. They believe
the PTO should be as inexpensive as possible for all US applicants,
and a surcharge should be applied to foreign applications.
[PTO staff pointed out that the Paris
Convention and GATT legislation both prohibit discrimination
in patent fees based on nationality.]
During the sessions with PTO customers, several problems and concerns regarding PTO deposit accounts were raised. These problems included:
There was some concern expressed that
with pre-grant publication the PTO is exerting control of an invention
from filers due to disclosure of patent application information.
Also, the PTO would be charging filers for this disservice. These
customers believe secrecy should be preserved or innovation will
decrease. Other customers are pleased with the idea of publishing
Discount Fee after Initial Application
Denials of applications can be devastating
to new inventors, and could discourage innovation. Therefore,
it was suggested that the PTO offer a discounted filing fee for
a second or third application as an encouragement to previously
Royalty Charges on Successful Inventions
Instead of maintenance fees paid at
set times after issuance, it was suggested that royalty fees be
assessed and charged after an invention has proved successful.
Successful, commercialized patents could support the PTO, and
it would give an inventor more time to develop and commercialize
It would be very difficult, according
to customers, to determine patent-based income and patent valuation,
and inventors would oppose taxes on patent assessment value.
Inactive Patent Status
Customers proposed a new patent status,
an inactive patent. This type of patent could only be elected
after issuance. The patent could not be marketed or used commercially
while in inactive status (nor could the owner make any attempt
to market or commercialize it). Maintenance fees would be set
at a lower amount for patents in this status. Once a patent owner
decided to begin marketing or commercializing the patent, the
status would be changed, and higher maintenance fees would be
The existence and danger of submarine
patents was raised at one session. Customers are concerned that
this type of patent is not commercialized by owners but used to
bring infringement lawsuits against other inventors. This discourages
small companies from commercializing products and does not promote
the useful arts and sciences.
Several issues related to appeal fees were discussed:
It was suggested that the unavoidable
revival fee should be set at a larger amount than the unintentional
Several customers suggested a structure of combining filing and issues fees. It was believed that this combination fee could be at a lesser amount than the filing and issue fees summed together. Even at this lower amount, there were many oppositions raised to this structure.
The concept of accepting informal drawings
at an increased fee was raised. It was assumed that this would
give more flexibility to applicants. Opposition to this idea concerned
the added cost that would be incurred by the PTO. Informal drawings
would result in two examinations, the first with the informal
drawings and the second with the resultant formal drawings.
A deferred examination would be a service
embraced by certain applicants, although not favored by all applicants.
It was suggested that a three to six month grace period be offered.
It was questioned why design fees are
not charged similarly to other patent applications, and why design
patents are not charged maintenance fees. As suggested by customers,
this could be a source of income for the PTO.
Patent Attorney Fees
A majority of customers indicated that
PTO fees represent a relatively small part of the overall of cost
of seeking a patent when compared to attorney fees.
Some customers were unsure of the benefits
of provisional applications. A concern was raised that if an application
had evolved too much from the original provisional application,
the earlier filing date would not be rewarded. Other customers
were pleased with provisional applications, although they would
like to see the grace period extended from 12 months to 24 months,
which would allow a more complete invention, and a stronger application
with a better chance of success.
A team of examiners, or a panel, instead
of an individual examiner, was a suggestion raised by a customer.
One Claim per Application
Customers did not favor a suggestion
to allow only one claim per application filing fee. If this were
to occur resultant claims would be unduly narrow.
Petition to Make Special
It was suggested to offer a petition
to make special at an elevated fee, because certain customers
would be willing to pay a substantial amount for this service.
There was confusion expressed from a
customer on the necessity of paying a petition fee in order to
have a petition heard.
Extensions of Time
Session participants did not favor extension
of time fees. Some participants did not object to the charge itself,
only the amount of the fee, believing the fee is too stiff. Others
indicated the charge is unjust. There was a suggestion to install
a "refamiliarization fee" in place of an extension of
A few concerns regarding late fees were
raised. It was suggested that if a six month payment window was
always enforced, less extensions of time would be necessary. Customers
also disagreed with being charged a late fee because there are
no extra costs being incurred by the PTO to support the charge.
A participant requested that the PTO
offer a post-grant review of examination.
Fees are not charged for interferences.
It was suggested that perhaps there should be a charge because
it is a very price insensitive commodity.
Fees for Different Levels of Examination
A few customers suggested offering different
levels of examination for different types of patents, at an applicant's
request. Other customers disagreed with this suggestion, basing
their opinions on the belief that all patent examinations should
be as thorough as possible. They suggested a good beginning assumption
is that all patents are subject to litigation.
It was suggested to duplicate some fees
from the EPO office, especially translation fees.
Questions, issues and concerns were raised regarding specific PTO actions and patent processing procedures. Some questions or issues will be addressed or examined by the Fee Study Team. The remaining questions and issues have been forwarded to the responsible PTO personnel.
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